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. Transfer risk regarding routine changes in operating costs from the ratepayers to PGS . Increase services to the community consistent with industry standards and adjacent communities . Increase the City franchise fee to be more consistent with those in other communities that will help offset the impact of refuse services conducted in the community . Create a service rate adjustment system based on clearly identifiable regional cost indexes, thus replacing negotiated service rate settlements . Eliminate all practices related to cost carryovers from year to year that place the city customers at risk of absorbing these unexpected costs . Increase the transparency of related party financial interactions . Agree on a reasonable term length for a new agreement DISCUSSION Staff and PGS have negotiated an agreement that meets all the above goals. A summary of the key provisions are as follows: Key Provisions of the Agreement The existing agreement has been rewritten and provisions made consistent with similar agreements in Dublin and Livermore. Among other changes, the Agreement contains the following major provisions: • The Agreement would commence on July 1, 2018 (one year prior to the expiration of the current Franchise) and terminate on June 30, 2028; . PGS will provide residential curbside bulky waste pick up (three times annually subject to weight and size limits) and used motor oil and filter collection; • PGS will install a new state of the art management information system sufficient to meet reporting requirements, address customer inquiries and assist staff with data collection and reporting; . PGS will provide for drop off of E-Waste and U-Waste from residential customers including fluorescent lights at the transfer station (pending permitting approval anticipated in September of 2018); . City Franchise Fee amount is increased from 2 percent to 4 percent. PGS will pre- pay one-half of one percent (0.5%) of Gross Rate Revenues and Transfer Station Revenue in advance and make monthly Franchise Fee payments equaling three and one-half percent (3.5%) of Gross Rate Revenue and Transfer Station Revenues. (This amount may increase based on any cost savings from the procurement of organic and recyclable material processing services); . Service rate adjustment reviews will occur based on an index or, under unusual conditions, a cost-based basis. The annual index based adjustment involves use of various cost adjustment factors (such as percentage change in the consumer price index and percentage change in approved tipping fees) to calculate adjusted service rates. In the event of uncontrollable circumstances (defined in the Agreement) a cost based adjustment, involving a detailed review of PGS's and its related parties' actual costs of service and determination of adjusted rates to reflect projected costs. If a cost based adjustment is used, which will be infrequent considering the specific Page 3 of 6